IMF Chief Says Global Trading System Currently At Risk

April 12, 2018
IMF Chief Says Global Trading System Currently At Risk April 12, 2018 Clive Nelson

Christine LagardeThe Managing Director of the International Monetary Fund (IMF) Christine Lagarde warned that the global system of trade that has allowed the world to become so prosperous for the past few years is at risk of being torn apart because of an aggressive turn to protectionism.

Lagarde issued this warning during a speech on April 11 at the Asia Global Institute in Hong Kong.

Trade Wars Pose A Major Concern

This warning stems from the increasing fears of a possible trade war between multiple countries. Trouble started earlier this year when President Donald Trump's issued steep tariffs on steel and aluminum imports into the United States. China, one of the biggest producers of steel in the world, responded by imposing stiff tariffs of their own on US products. The United States’ other trading partners responded much less drastically but were equally upset over the steep tariffs on steel and aluminum imports and Europe also issued a threat.


The current result of this trade standoff is that China and the US have both announced billion-dollar tariffs on each other's key exports. Experts say that this tit-for-tat exchange will only damage the world economy as jobs will be lost and growth will stall. Though the tariffs have not been finalized, the market is still feeling the saber-rattling between the two countries.

Experts already warn that any increase in global tariffs could result in a 3% contraction of global trade, with global growth stalled by 1%.

Lagarde Warns Against Protectionism

Lagarde warns governments that they should avoid implementing protectionism. She says that history has proven that these restrictions can hurt many, especially those consumers who depend on low-cost products. She also mentioned that improvements to the global system can be made by examining their own practices.

In a statement, Largarde said

We need to be a little bit sensible about this talk about a trade war. There are threats and there are counter threats, there is an attempt to open a dialogue and I think we should support that dialogue attempt as much as we can, that is the way to progress the situation, not to let it snowball into something that would then lead to significant consequences.

Despite her fears, Lagarde is still optimistic about the growth of the global economy. She described ongoing upswing in the global marketplace, with many national economies reporting growth. She did point out that this was an excellent time to implement proper reforms to better adapt to future challenges. She also pointed out that countries should also avoid taking risks, referring to the increasing amount of global debt that has reached a massive $164 trillion.

About the Author

Clive Nelson

Clive Nelson Author

Hi, my name is Clive Nelson and welcome to Traders Bible. Just to tell you bit about myself…I have been trading FX and binary options for the best part of 10 years now. After graduating with honours in economics, I began working for an investment bank in New York as an assistant trader before working my way up. After a few years, I went on to work as a broker in London, England and then eventually came back to the U.S to work in a hedge fund, where I manage $800 million of my clients’ investments. There have been times over the course of my career where I’ve had to take a hit, but I’ve accepted that losing is part of the game, it’s a learning curve. I’ve learnt from my mistakes and you don’t have to make the same errors I did. A lot of my education came from when I was a broker and this is why I’m here to tell you that Traders’ Bible offers you the foundations of how to become a great trader.

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